AKU-EB May Examination 2017

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1 Page 1 of 12 AGA KHAN UNIVERSITY EXAMINATION BOARD SECONDARY SCHOOL CERTIFICATE CLASS X EXAMINATION APRIL/ MAY 2017 Principles of Accounting Paper I INSTRUCTIONS 1. Read each question carefully. Time: 35 minutes Marks: Answer the questions on the separate answer sheet provided. DO NOT write your answers on the question paper. 3. There are 100 answer numbers on the answer sheet. Use answer numbers 1 to 25 only. 4. In each question there are four choices A, B, C, D. Choose ONE. On the answer grid black out the circle for your choice with a pencil as shown below. Candidate s Signature 5. If you want to change your answer, ERASE the first answer completely with a rubber, before blacking out a new circle. 6. DO NOT write anything in the answer grid. The computer only records what is in the circles. 7. You may use a simple calculator if you wish. 8. Wherever new terminologies are mentioned their old terminologies are mentioned in the brackets for your assistance.

2 Page 2 of The following details have been extracted from the books of Aleem and Company on December 31, Particulars Amount (Rs) Trade receivable (accounts receivables) 200,000 Allowance (provision) for bad debts 20,000 On December 31,2015, the company decided to revise the rate of doubtful debts from 10% to 20%. The adjusted journal entry to correct the amount of bad debts expense for the year will be Particulars P.R. Debit Credit A Bad debts expense 20,000 Allowance for bad debts 20,000 B Bad debts expense 40,000 Allowance for bad debts 40,000 C Allowance for bad debts 20,000 Bad debts expense 20,000 D Allowance for bad debts 40,000 Bad debts expense 40,000

3 Page 3 of Ms Munira purchased a water treatment plant for Rs 100,000 for her business. She paid the following expenses before using the plant. Particulars Amount (Rs) Transportation charges 3,500 Installation charges 4,500 Insurance in transit 15,000 3 year fire insurance 25,000 Foundation charges 7,000 The total cost of the plant that will be recorded in the books of the business will be A. Rs 108,000 B. Rs 123,000 C. Rs 130,000 D. Rs 155, The following data has been extracted from the books of Azra Enterprises. Trade receivables (accounts receivable) Rs 50,000 Allowance (provision) for doubtful debts for the year Rs 1,000 The company s policy is to estimate allowance (provision) for doubtful 2% each year. It was found that bad debts for Rs 1,000 were not recorded in the books of accounts. The total amount of bad debt and allowance (provision) for doubtful debt that will be transferred to the Income statement will be A. Rs 980 B. Rs 1,000 C. Rs 1,980 D. Rs 2, Hashim and Sons purchased a machine with a list price of Rs 950,000. The estimated useful life of machine is 15 years. Business also incurred the following expenditures on the machine: Training of staff for machine operation Rs 25,000 Installation charges paid to professional Rs 12,500 Repair of part damaged during installation Rs 50,000 Transportation expense to bring the machine Rs 25,000 Premium paid for 3 year fire insurance policy Rs 75,000 The total capital expenditure incurred after the purchase of machine will be A. Rs 62,500 B. Rs 87,500 C. Rs 125,000 D. Rs 187,500 PLEASE TURN OVER THE PAGE

4 Page 4 of On March 01, 2014, Aleem Enterprises purchased a machine with a list price of Rs 450,000, with the credit term of (5/10, n/30) and trade discount of Rs 20,000. If the company paid the amount on March 08, 2014, then the cost of the machine will be A. Rs 407,500 B. Rs 408,500 C. Rs 427,500 D. Rs 430, On January 01, 2012, Beta Corporation purchased a machine for Rs 500,000 with an estimated life of 5 years. The company uses 30% diminishing balance method for charging depreciation and its accounting year ends on December 31 each year. On July 01, 2014, the business decided to exchange the machine with a new machine costing Rs 700,000, with agreed trade in allowance of Rs 200,000 for the old machine. The above exchange of machine will result in a A. loss of Rs 8,250 B gain of Rs 8,250 C. loss of Rs 28,500 D. gain of Rs 28, Which of the following account head will NOT be closed at the end of the financial year? A. Bad debts B. Sales revenue C. Depreciation expense D. Allowance for depreciation 8. Rabia Enterprises have the following account balances on December 31, Particular Amount (Rs) Particular Amount (Rs) Purchases 150,000 Transportation in 35,000 Inventory (Stock) opening 12,000 Inventory (Stock) ending 15,000 Purchase return 8,500 Purchase discount 7,000 The amount of net purchases for Rabia Enterprises will be A. Rs 134,500 B. Rs 143,000 C. Rs 150,000 D. Rs 169,500

5 Page 5 of On April 01, 2014, Ms Ammara paid Rs 72,000 for advertising her new product for twelve months. Her accounting period ends on June 30 each year. The amount of advertisement expense shown in the Income statement of Ms Ammara for the year ended 2014 will be A. Rs 6,000 B. Rs 18,000 C. Rs 54,000 D. Rs 72, The closing entry for sales revenue account will be Particulars P.R. Debit Credit A Sales revenue XXX Purchases B Sales revenue XXX Expense and revenue summary C Expense and revenue summary XXX Sales revenue D Purchases XXX Sales revenue XXX XXX XXX XXX PLEASE TURN OVER THE PAGE

6 Page 6 of The following balances are extracted from the books of Al-Hamra Traders Salary expense Rs 15,000 Accrued rent Rs 25,000 Insurance expense Rs 45,000 The data for adjustment shows insurance expense for the year Rs 25,000 The adjusting entry for insurance expense at the end of the year will be Particular P.R. Debit Credit A Insurance expense 20,000 Insurance payable 20,000 B Prepaid insurance 20,000 Insurance expense 20,000 C Insurance payable 20,000 Insurance expense 20,000 D Insurance expense 20,000 Prepaid Insurance 20, In single entry system (incomplete records), the Statement of financial position (Balance sheet) is known as A. income statement. B. statement of affairs. C. cash flow statement. D. statement of changes in equity.

7 Page 7 of Following are the account details of Sajida Traders. Particulars January 01, 2015 December 31, 2015 Trade receivables (accounts receivable) Rs 120,000 Rs 90,000 Cash received from customers Rs 780,000 Sales returns from credit customers Rs 29,600 The net amount for credit sales for the year ended December 31, 2015 will be A. Rs 720,400 B. Rs 779,600 C. Rs 839,600 D. Rs 960, The following balance has been extracted from the books of Munir Limited. Particulars Amount (Rs) Capital opening balance 55,000 Capital closing balance 80,000 Additional investment during the year 42,000 Drawing during the year 5,000 The net profit/ loss for the accounting year from the above information will be A. Rs (72,000) B. Rs (12,000) C. Rs 62,000 D. Rs 97, The difference between the selling price and the cost of goods and services is considered as A. margin. B. interest. C. mark up. D. net profit. PLEASE TURN OVER THE PAGE

8 Page 8 of In the books of Allauaddin Associates, the salary paid to a staff member was shown as Rs 700 instead of Rs 7,000. The corrected journal entry to rectify the above error will be Particulars P.R. Debit Credit A Salary expense 7,000 Cash 7,000 B Salary expense 7,000 Salary expense payable 7,000 C Salary expense 6,300 Salary expense payable 6,300 D Salary expense 6,300 Cash 6,300

9 Page 9 of Mr Saleem is an accountant in Amin Traders. He receives a payment of Rs 10,000 from a customer but the customer has not specified which open invoice he intend to pay. At the time of compilation of accounts, a suspense account will be formulated until the payment is ascertained. Which of the following general journal entries will be posted for this purpose? Particular P.R. Debit Credit A Suspense account 10,000 Account receivable 10,000 B Account receivable 10,000 Suspense account 10,000 C Suspense account 10,000 Cash 10,000 D Account payable 10,000 Profit and loss account 10,000 PLEASE TURN OVER THE PAGE

10 Page 10 of Ms Anusha is an accountant in Alpha Traders. She receives a payment of Rs 25,000 from a customer but the customer has not specified which sales invoice they intend to pay. The amount was temporarily parked to suspense account; meanwhile Ms Anusha enquired the customer about the sales invoice against which the payment was made. The general journal entry to shift the payment from the suspense account to actual account head will be Particular P.R. Debit Credit A Suspense account 25,000 Account receivable 25,000 B Account receivable 25,000 Suspense account 25,000 C Suspense account 25,000 Cash 25,000 D Account payable 25,000 Profit and loss account 25, Which of the following errors requires a suspense account to balance the trail balance? A. Principle error B. Commission error C. Compensating error D. Partial Omission error 20. Mr Aslam wrongly posted the amount paid for whitewashing the office building walls in the office building account instead of repair and maintenance account. Such an accounting error will be classified as A. error of principle. B. error of commission. C. error of original entry. D. error of complete reversal. END OF PAPER

11 Page 11 of During the year 2014, Ali Sports Club received Rs 36,000 as subscription fee from its members. Other accounting information for subscription is as follows. Particulars January 01, 2014 December 31, 2014 Subscription in advance Rs 3,000 Rs 4,000 Subscription in arrears Rs 5,000 Rs 2,000 What is the amount of subscription income to be included in income and expenditure account for the year 2014? A. Rs 32,000 B. Rs 36,000 C. Rs 40,000 D. Rs 41, A business organisation allows people to combine resources in order to achieve common goals and agrees to organise and operate for charitable mission only, as it wants to give benefit to the society in a tangible way. The given characteristics of business organisation can be found in a A. public corporation. B. private corporation. C. non-profit organisation. D. multinational organisation. 23. The capital account of Non-Profit Organisation (NPO) is termed as A. retained earnings. B. authorised capital. C. accumulated fund. D. reserves and funds. 24. Judging from the types of organisations mentioned in the given options, identify which of the following is a Non-Profit Organisation (NPO). A. Sahara Trust B. Edhi Foundation C. Aga Khan Development Network D. House Building Finance Corporation

12 Page 12 of Orient Health Club, a Non-Profit Organisation (NPO), charged consultation fees for providing services to Al-Hamra Health Club. The above mentioned activity which is not associated with the core activities of the NPO is termed as A. ancillary activity. B. chartered activity. C. professional activity. D. non-commercial activity.

AGA KHAN UNIVERSITY EXAMINATION BOARD SECONDARY SCHOOL CERTIFICATE CLASS X EXAMINATION MAY Principles of Accounting Paper I

Page 1 of 8 AGA KHAN UNIVERSITY EXAMINATION BOARD SECONDARY SCHOOL CERTIFICATE CLASS X EXAMINATION MAY 2015 Principles of Accounting Paper I Time: 35 minutes Marks: 25 INSTRUCTIONS 1. Read each question